MUMBAI: The Aditya Birla group, which built the world's seventh-largest cement business largely through acquisitions, is in talks to buy north-eastern cement maker Adhunik MSP Cement's Meghalaya plant for over Rs 700 crore.

Group firm UltraTech Cement wants to buy the 1.5-million-tonne unit and bolster its presence in the fast-growing but largely untapped market in the North-East. Due diligence for the unit located at the limestone-rich Jaintia Hills has been completed and the fate of the deal hinges on the availability of some statutory no-objection certificates as mining leases and environmental clearances are prerequisites for any large manufacturing transactions in the North-East, a person familiar with the transaction said.

It also hinges on the plans of a multinational company that is believed to be in talks to buy the unit. While the name of the company could not be ascertained, MNCs, including French giant Lafarge, have been trying to make deeper inroads into the North-East. Lafarge's plan to set up a 1.1-million-tonne cement unit at Jaintia Hills is facing some environmental opposition and the firm may want to buy a readymade unit.

The joint venture company, promoted by Kolkata-based Adhunik and MSP group, set up the unit at a total cost of Rs 700 crore in 2010.

Cement Cos Rush to North-East

Adhunik Cement sells portland cement, which is one of the major products of UltraTech.

"We are aways looking at acquistions as part of our growth strategy. We have not firmed up anything as of now," said OP Puranmalka, whole-time director, UltraTech Cement. An email sent to Adhunik MSP Cement Managing Director Mahesh Agarwal and HR head Priyanka Dastidar went unanswered.

Cement companies are rushing to build up capacities in the north-eastern region to cash in on the anticipated surge in demand triggered by the rising number of hydroelectric projects and road constructions. The government has firmed up an investment of over Rs 84,000 crore for setting up hydel projects in the North-East by 2020, which will produce 14,000 mw of electricity.

"If you are competitively placed in a structurally deficit region, it makes strategic sense to build capacities," said Ajith Motwani, analyst at Emkay Global Securities.

None of the major cement companies, with the exception of Lafarge, has a presence in the North-East.

While large players such as UltraTech Cement are marketing their products from other states, Cement Manufacturing Company's Star Cement is one of the largest brands in the North-East. The Dalmia group is now setting up a 2.5-million-tonne plant in the region. Little-known players like Meghalaya Cement are also present in the market.

UltraTech Cement Limited has an annual capacity of 52 million tonnes, making it among the top 10 producers of cement globally.